Management Accounting Report: Ice Department, Planning, and Brexit

This report provides a detailed analysis of management accounting practices, specifically focusing on the Ice Department. It begins by exploring various planning tools, such as pricing strategies, PEST analysis, and budgeting, outlining their advantages and disadvantages within the context of budgetary control. The report then addresses the financial problems faced by the Ice Department and similar organizations, particularly in response to Brexit. It examines how the company is adapting its management accounting system through benchmarking, key performance indicators, and financial governance. The report also highlights the role of management accounting in achieving sustainable success, including the incorporation of sustainable matters into decision-making. Finally, the report concludes by emphasizing the importance of management accounting in improving overall efficiency and supporting budgetary control.

Running head: MANAGEMENT ACCOUNTING
MANAGEMENT ACCOUNTING
Name of the Student
Name of the University
Author Note:

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Table of Contents
Introduction......................................................................................................................................2
Discussion........................................................................................................................................2
Planning tools..............................................................................................................................2
Responding to financial problem.....................................................................................................4
Conclusion.......................................................................................................................................6
Reference.........................................................................................................................................7

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Introduction
The report focuses on the tools of planning used in the management accounting of the Ice
department along with their advantages and disadvantages to the company and their usefulness in
the budgetary control. The second part of the report focuses on the financial problems faced by
the ice department and other similar organisation particularly with the separation of the United
Kingdom from the European Union and how the management accounting will be helpful in
responding to the financial problem.
Discussion
Planning tools
Planning tools are the instruments that guide the action of the organisation towards the
implementation of an initiative or a program (Cameron and Green, 2019). The three planning
tools that can be used by the Ice department for budgetary control tools are pricing strategy,
PEST analysis and budget (Drury, 2015).
Advantages and Disadvantages of Planning tools
The pricing strategy contemplates the account sections, the market competition, margins,
ability to pay, input cost, etc. It focuses on some detailed customers and is set against the
competition. Budgeting and pricing are a dynamic due that will help to cater the demand along
with earning sufficient profit. The pricing strategy focuses on both market plan and expected
ROI, therefore if the ice department uses pricing strategy according to profit-oriented consumer
show then it will help in proper estimation of the budget (McDonald and Wilson, 2016). Pricing
strategy hence plays a substantial role in the preparation of the budget and forecast.

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The PEST analysis is extensively used as a strategic planning tool to classify the political,
economic, social and technological factors that affect the project and its planning process. By
making a comprehensive assessment of the PEST analysis, ice department can position itself
well from the factors that can impact organisational profit. Apart from providing an analysis on
external factors that affect the profitability, it will help the Ice department to prepare the budget
accordingly by keeping some contingent asset to cope up with the unforeseen liabilities or losses
(Barbara et al., 2017).
A budget is the preparation of the statement of the predictable financial result related to a
given future period. As a planning tool, budgetary control can be used to contol and propose the
production or manufacturing and selling of the products of the ice makers, and to encourage
coordination and communication amid the departments and managers, and to evaluate the
performance of the Ice Department Ltd. A budget plan will help the Ice department to ensure that
it achieves its objective in the future period. The advantages and disadvantages of the budget in
budgetary control are as follows (Tie et al., 2015):
Advantage:
 It helps in coordinating activities among the different departments.
 It helps in translating strategic plans into action.
 It Improves communication among employees.
 It provides a tool for taking corrective action through reallocation.
 Helps in maintaining an outstanding record of the organisational activities.
Disadvantages:
 The main complications arise when the budget is applied instinctively and inflexibly.

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 When the budget is imposed top-down arbitrarily, it can demotivate employees since they
may not be able to comprehend the motive for budgeted expenditure.
 It can lead to the creation of competition of resources and politics.
 An inflexible budget can diminish creativity and improvement at a lower level, which
makes difficult to attain monies for new ideas.
Responding to financial problem
Financial problems are circumstances where money worries cause stress to the company.
Brexit is the name given for “British exit” from the European Union. Since the UK left the EU
on Jan 31, 2020. The three ways in which the Ice department is adapting their management
accounting system to respond to the financial problem of Brexit is:
 Benchmarking - Management accounting can be used as a benchmarking tool for aiming
out the crucial financial areas and can accordingly help the finance managers of the Ice
department to improve the overall standard of the operational practice. Since the
management accounting is a basis for rationalization the internal benchmarking as a
result of which the ice department can make a comprehensive monitoring facility for the
financial problem (Duffie, Dworczak and Zhu, 2017).
 Key Performance Indicator – It is a sort of performance management used to gage the
accomplishment of the organisation or of a specific activity in which it engrosses. The
ice department can use this performance indicator to identify sources of budding
improvements as performance indicators are habitually linked with the performance
enhancement initiative. The most common way which can be chosen by the Ice
department is the balanced scorecard (Al-Hosaini and Sofian, 2015).

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 Financial governance – The financial governance team includes board members who will
ensure the Ice department that the organisation has abundant contingencies funding by
making certain that the organisation operates within the law. It will also ensure that it has
hands-on strategies for scrutinizing and responding to social problems which are
presently high due to the separation of the United Kingdom from the European Union.
The competitor of the Ice Department Ltd in the United Kingdom is Ziegra company which
is providing all kind of quality ice machine, ice maker and automatic ice system for food. The
balanced scorecard which is explanatory for financial performance assessment will play a brief
role in refining the overall performance and sustainability of the organisation. Secondly, the
management accounting software will help the Ice Department Ltd, with a better room for better-
quality financial decision making with regards to the amount of capital investment and ploughing
back of profits, etc. By this way, the Ice department will be able to produce sustainable financial
information for effective operational practice as equated to the Ziegra company.
Role of Management Accounting in Sustainable Success
The function of management accounting in the achievement of sustainable success of the ice
departments are as follows (Lopez-Valeiras, Gomez-Conde and Naranjo-Gil, 2015):
 Various management accounting tools and techniques like breakeven analysis, marginal
costing, standard costing, etc. can support in incorporation of various sustainable matters
into the decision-making process.
 It aids in the production of reports which will comprise information on the sustainable
impact and that will assist in comprehending pricing and budgeting strategies and
strategic planning.

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 The developed strategies and policies will help the managers to sustenance strategic and
sustainable goals
Conclusion
Management accounting system thus assist to improve the overall efficiency of the ice
maker establishment for execution of its key operation. As the management accounting
technique encompasses budgetary control, it also helps in budgetary control process. From the
above process, the business of the ice department will be able to drape the aggregate expenditure
from the operational activities.

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Reference
Al-Hosaini, F.F. and Sofian, S., 2015. A review of balanced scorecard framework in higher
education institution (HEIs). International Review of Management and Marketing, 5(1), pp.26-
35.
Barbara, C., Cortis, D., Perotti, R., Sammut, C. and Vella, A., 2017. The european insurance
industry: A PEST analysis. International Journal of Financial Studies, 5(2), p.14.
Cameron, E. and Green, M., 2019. Making sense of change management: A complete guide to
the models, tools and techniques of organisational change. Kogan Page Publishers.
Drury, C. (2015) Management and Cost Accounting. 9th Ed. Cengage Learning.
Duffie, D., Dworczak, P. and Zhu, H., 2017. Benchmarks in search markets. The Journal of
Finance, 72(5), pp.1983-2044.
Lopez-Valeiras, E., Gomez-Conde, J. and Naranjo-Gil, D., 2015. Sustainable innovation,
management accounting and control systems, and international performance. Sustainability, 7(3),
pp.3479-3492.
McDonald, M. and Wilson, H., 2016. Marketing Plans: How to prepare them, how to profit from
them. John Wiley & Sons.
Tie, X., Zhang, Q., He, H., Cao, J., Han, S., Gao, Y., Li, X. and Jia, X.C., 2015. A budget
analysis of the formation of haze in Beijing. Atmospheric Environment, 100, pp.25-36.